SGR hopes face tough re­al­i­ties

$139 bil­lion, new pay­ment for­mula still needed

Modern Healthcare - - THE WEEK IN HEALTHCARE - Rich Daly

Leg­is­la­tors on both sides of the aisle and on both sides of Capi­tol Hill are tout­ing their early start on over­haul­ing the Medi­care physi­cian pay­ment sys­tem. How­ever, those claims of progress will soon run into hard re­al­i­ties: No one has yet come up with a con­crete plan to ad­dress the big­gest ob­sta­cles to scrap­ping the sus­tain­able growth-rate sys­tem.

The high­est hur­dle of course, is money. Congress needs to come up with an es­ti­mated $139 bil­lion over the next decade to per­ma­nently elim­i­nate the SGR. And then there’s the thorny ques­tion of what to re­place it with.

There were scant signs of progress on those ques­tions dur­ing last week’s Se­nate Fi­nance Com­mit­tee meet­ing, the first SGR hear­ing in the up­per cham­ber since 2007. The panel had sent a re­quest for provider feed­back on pos­si­ble pay­ment changes a week ear­lier.

The House of Rep­re­sen­ta­tives, with its large GOP Doc­tors Cau­cus, has al­ready held two hear­ings this year on re­form­ing Medi­care’s physi­cian pay­ment sys­tem. Key com­mit­tees have also re­quested physi­cian feed­back and are ex­pected this week to start cir­cu­lat­ing draft leg­is­la­tion.

The flurry of ac­tiv­ity is rais­ing hopes among physi­cian lob­by­ists that the long-stand­ing push to re­place the hated SGR for­mula will fi­nally suc­ceed this year. “Usu­ally we get to the fall and peo­ple start wring­ing their hands and gnash­ing their teeth, and it’s too late to have the kind of dis­cus­sion we’re hav­ing now,” said Julius Hob­son, a for­mer lob­by­ist with the Amer­i­can Med­i­cal As­so­ci­a­tion who now serves as a se­nior pol­icy ad­viser at Polsinelli, a national law firm that also em­ploys lob­by­ists. The clients of its health­care lob­by­ists are pri­mar­ily health sys­tems. This year’s ef­fort “means by the fall we should be able to nar­row some­thing down and come up with a pack­age that might work,” Hob­son said.

The SGR, cre­ated by the 1997 Bal­anced Bud­get Act, links physi­cian fees and costs to the U.S. gross do­mes­tic prod­uct. It in­cludes a “claw­back” mech­a­nism that re­duces Medi­care fees if over­all spend­ing ex­ceeds a for­mula-driven tar­get.

When that pro­vi­sion pro­duced a 4.8% pay cut to physi­cians in 2002, the out­cry from providers led Congress to sus­pend the cut. The govern­ment has done the same ev­ery year since, pro­duc­ing the need for an ever-larger re­duc­tion that next year could re­sult in a 24.4% cut in Medi­care physi­cian pay­ments on Jan. 1, 2014.

Among the early de­tails that ap­pear to be part of the House leg­is­la­tion is a five-year tran­si­tion to any new pay­ment sys­tem. Rep. Phil Roe (R-Tenn.), a leader in the GOP Doc­tors Cau­cus, said that group has joined many physi­cian ad­vo­cacy groups in op­pos­ing ef­forts for a quick tran­si­tion to a re­place­ment sys­tem be­cause “that’s just not enough time to im­ple­ment some­thing as big as how you pay all of the physi­cians.”

But such early com­mon ground has left un­re­solved ma­jor stick­ing points, in­clud­ing the fact that the two cham­bers are look­ing at dif­fer­ent ap­proaches to move away from the cur­rent sys­tem. The Se­nate ef­fort ap­pears fo­cused on short-term changes that grad­u­ally wean physi­cians from the fee-for-ser­vice pay­ment model, while the House has fo­cused on long-term re­place­ment mod­els.

Se­nate and House lead­ers ques­tioned last week by Mod­ern Health­care said they re­main fo­cused on their own pro­pos­als in­stead of the de­tails of the op­po­site cham­ber’s SGR re­place­ment plans. But physi­cian ad­vo­cates are hope­ful that the ef­forts ul­ti­mately will com­bine in some man­ner. “I’m op­ti­mistic that they are go­ing to come to­gether in the next few months,” said one physi­cian ad­vo­cate, speak­ing on con­di­tion of anonymity.

Broad agree­ment has emerged on the need for a re­place­ment sys­tem that ties much more of fu­ture physi­cian pay­ments to the qual­ity of care they de­liver. The tiny per­cent­ages of physi­cian pay cur­rently at stake in pro­grams such as the Physi­cian Qual­ity Re­port­ing Sys­tem are seen as in­suf­fi­cient to drive the de­sired changes in care.

But the devil is in the de­tails. The GOP-led House is un­likely to give ad­di­tional power to CMS reg­u­la­tors to make the fi­nal de­ci­sions on physi­cian pay.

Since the Pa­tient Pro­tec­tion and Af­ford­able Care Act be­came law three years ago, House Repub­li­cans have railed against CMS rules im­ple­ment­ing its myr­iad pro­vi­sions. “They may be more in­clined to be more pre­scrip­tive,” said an­other physi­cian ad­vo­cate, who noted that the leg­isla­tive out­lines of fu­ture pay­ment sys­tems is­sued so far by House lead­ers have been fairly gen­eral.

Not­ing the var­i­ous pilot projects now un­der­way that are test­ing al­ter­na­tives to fee-for-ser­vice medicine, other an­a­lysts said the cru­cial de­tails in a per­ma­nent re­peal bill will have to take into ac­count the suc­cess or fail­ure of those ex­per­i­ments. Repub­li­cans still haven’t agreed “how many of the de­tails will be leg­is­lated by Congress and how much will they have to de­fer to a fu­ture reg­u­la­tory process that takes into ac­count the fact that we’re still test­ing all of th­ese mod­els,” said An­ders Gilberg, se­nior vice pres­i­dent of govern­ment af­fairs for the MGMA. Gilberg and oth­ers noted that there is lit­tle data avail­able to as­sess whether ac­count­able care or­ga­ni­za­tions and bun­dled-pay­ment mod­els can de­liver on their prom­ises of im­proved care and lower costs.

The big­gest un­re­solved ques­tion in the SGR re­peal ef­fort, though, and the one that has stymied pre­vi­ous ef­forts, is fund­ing. The cost of toss­ing the SGR and its hated cuts dropped sig­nif­i­cantly this year, down 43% from $245 bil­lion to $139 bil­lion, ac­cord­ing to es­ti­mates is­sued last week by the Con­gres­sional Bud­get Of­fice.

That re­duc­tion may have helped, but the two par­ties re­main far apart on an ap­pro­pri­ate way to cover the cost. Both sides agreed that find­ing a fund­ing source will wait un­til late sum­mer or the fall, when Congress is ex­pected to de­bate rais­ing the debt ceil­ing.

The main stick­ing point “with re­gard to SGR is al­ways money—how do you off­set it,” said Sen. Or­rin Hatch (R-Utah).


Se­nate Fi­nance Chair­man Max Bau­cus (D-Mont.) said dur­ing a May 14 hear­ing that it’s time “to re­peal the SGR once and for all this year.”

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